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Changes in Stock Options

Gordon Davidson, Fenwick & West, LLP

The way in which stock options are valued is going to change. Though many companies have generous stock options, they also pay generous salaries because Silicon Valley is an expensive place to live and engineers need cash. Therefore, there is not a big differential between the salary with stock options and the salary without stock options. The size of stock options is likely to decrease, which means a reduced ownership of the company by employees and therefore a lowered incentive for creativity and innovation.